The document discusses the role of financial intermediaries in the non-life insurance industry in India. It notes challenges like low penetration, poor customer service and risk management practices. Intermediaries can help address these issues and play a key role in sales and service. Different types of intermediaries are outlined like agents, brokers, surveyors and third party administrators. The success of insurance companies depends on developing robust networks of intermediaries and meeting their training needs.

1. Financial Intermediaries in Non-Life Insurance FICCI October 16, 2001

2. Current Industry Scenario Low business and territorial penetration levels - need for new distribution channels Poor marketing strategies, lack of innovation in designing & pricing the product - New products and better packaging Low service standards - Need for improved customer service Poor Risk Management Practices - Prudent underwriting practices in line with international standards. Intermediaries to play a key role in fulfilling the above needs.

3. HR Seminar WHY AM I HERE ? The success of the Insurance business depends on the role played by the intermediaries. In the Indian context -role of intermediaries in : Life insurance business for procurement and servicing. General Insurance business - presently for servicing e.g. settlement of claims New Insurance Companies are getting organised - ability of the company to develop a complete network of robust intermediaries is key to success. Relevance and challenges in intermediation of the insurance business cannot be underestimated. Specialists to speak on various topics related to intermediaries training & HR interface

4. Definition What is Insurance ??? Insurance is all about a promise of a payment / service. Emerging Customer centric Business Model in India

5. The Changing Context In India Personal Lines - Car repair syndrome Commercial Lines Fire claims syndrome

6. Challenges Ahead : Global context The emerging expectations of the promise of the intermediaries Managing these expectations Long haul process of change management

7. Presentation Flow No of Slides Intermediaries 3 Current Scenario 4 Intermediaries - a schematic 1 Personal Lines Business 4 Motor product Intermediaries 2 Commercial lines 1 Other Issues 1 Summing up 2

8. Intermediaries Definition The link between insurer and insured (Customer) for insurance sales and service. Key/Formal Insurance intermediaries include Insurance Agents Brokers Insurance Consultants Surveyors and Loss Assessors Third Party Administrator Reinsurance Broker

9. Intermediaries (contd.) Other Intermediaries : Co-operatives Actuaries IT Systems provider Rating agencies Any other person assisting and representing an Insurer in any of the following: Soliciting, negotiating, procuring or effectuating an insurance contract or its renewal; Disseminating information relating to coverage or rates; Forwarding an insurance application; Servicing and delivering an insurance policy or contract

10. Intermediaries (contd.) Inspecting a risk; Setting a premium rate; Investigating or assessing a claim or loss; Transacting a matter after effectuation of a contract; Representing a matter after effectuation of a contract; Representing or assisting an insurer or other person in any other manner in the transaction of an insurance contract; Servicing a policy or contract. The total intermediation equation has to be right to be a successful insurance company in the new environment.

11. Current Scenario Key Intermediaries Agents Primacy to insurer’s interest (FACE OF INSURANCE COMPANY) Cannot represent multiple insurers hence are “tied” to an insurer Practical training and passing of examination is mandatory and sponsored by one insurer Discourages switching of Insurers Broker Primacy to insured’s interest Can represent multiple insurers to provide suitable products to the insured IRDA has formulated regulations governing insurance brokers (to be passed)

12. Key Intermediaries Surveyor / Loss Assessor To examine the claim and assess the actual loss suffered To submit a report for the consideration of the insurance company Third Party Administer (TPA) Arises mainly out of Managed Health Care business. Only “companies” registered under The Companies Act, 1956 are allowed to act as TPA IRDA is finalising regulations governing TPAs. Reinsurance Brokers Link between insurer and reinsurance organisations Incentivised by the reinsurer for annual treaties and facultative deals Current Scenario (contd)

13. Current Scenario (contd) Appointed Actuary Provides actuarial advice to the management. Assurance to IRDA Co-operatives Reach in rural areas rural populace more comfortable while dealing with cooperatives. IT Systems provider Essential support for all new Insurance companies IT systems backbone of the operations Rating Agencies - AM BEST, Standard & Poor, Moody’s

14. Current Scenario (contd) Skill set of an agent and broker Customer orientation Advice customer according to needs Ability to sell multiple products Provide market intelligence Good working knowledge of IRDA regulations and willingness to adhere to it

15. Surveyor/ Loss Assessor Third Party Administrator Intermediaries - a schematic Reinsurance Broker Broker Insurance Company IT Systems Provider Bancassurance Actuary Other Intermediaries Agent Risk Advisory Corporate Individuals Co-operatives

16. Personal Lines Business - Backdrop Untapped potential largely due to Lack of product knowledge and brand recall Absence of a customer centric approach Products not addressing the changing trends in customer needs Low penetration due to inadequate marketing / delivery system Absence of risk-cum-investment tools resulting in low involvement buying behavior Unattractive commission structure

17. Personal Lines - Opportunity Ahead Increased consumerism Increased social instability Higher disposable incomes Operation of law Changing attitudes Easier availability Increased medical cost

18. Some Challenges Ahead Need to develop state of the art training institutes focussing on sales & management Put in place scientific selection / recruitment of Intermediaries Promote, encourage professional association of intermediaries and self-regulation concepts Marketing support to distribution channels Link business strategy more effective with technological reality THERE IS URGENT NEED TO CREATE AN ENVIRONMENT/STRUCTURE, INCLUDING TRAINING CENTRES/EDUCATION TO ENHANCE CAPACITY BUILDING OF INTERMEDIARIES.

19. Suite of Personal Line Products Motor Home & Home content Health Overseas Travel Education ... Each line of business requires its own selling and processing intermediaries and dependency vary across the products MULTI DIMENSIONAL MANAGEMENT MATRIX

20. Motor Product Intermediaries Sales Agents for vehicle insurance Manufacturers wanting to become agents / brokers to provide one stop services to their customers Auto Dealers: point of sale influencers in the value chain Direct Marketing Agents:decision influencers at the point of provision of finance Services Surveyors Assessing vehicle damage Examining, Inquiring and Investigating the causes and circumstances of loss Estimating measuring and determining the quantum of loss

21. Motor Product Intermediaries (contd.) Garages and Workshops to carry out actual repairs Other Service Intermediaries Towing service providers On the spot repairs Trauma services Ambulance providers Blood banks

22. Commercial Lines- Intermediary Challenges Key Issues Business to Business vis-à-vis Business to Customer in PL Key differentiation Sales Process Different skill sets and role of Agents / Brokers More personalised approach Risk Assessment Intermediary Claims Servicing Role of surveyor critical

23. Other Issues Bancassurance Direct Channels

24. Summing Up - Emerging Scenario Emerging trend Channels to evolve according to market opportunities /economics Agents/Brokers will align to market and customer profile Implies Undertake agent profiling by doing intermediary mining Align agents to products being sold and customers being targeted over time

25. Learning from banking industry? Local flavour to play important role Rules of the game will be written by Indian Companies Key to success is keep ear to the ground and keep modifying as per changing requirements Fit ground realities to your organisation’s business strategy Summing Up - Looking ahead

26. Thank You

27. Backdrop - Motor Insurance claims Insurance Company Garage owner Surveyor Car Dealer Agent or Broker Towing & other Services Financier

28. Backdrop - Fire Insurance claims Insurance Company Surveyor Salvage Buyer Repairer Agent/Broker

29. Insurance Education Insurance Education Management cadre Operational level Domestic Training Overseas training Intermediaries

30. Direct Channels Minimum physical contact Call Centres Ideal for renewal business Economic dispensing of insurance related information Service related guidance and support E-Intermediaries Internet based information dispensing Other remote terminals ATMs Kiosks

31. Banks as an Agent - Bancassurance (?) Provides readymade customerbase Approx. 70,000 bank branches Insurance products can be linked with banking products Comfort for customers since he is accustomed to doing regular monetary transactions with the bank. Reach potential middle / lower class population Ease in sale of standard products Sales experience in other products Mutual funds Credit cards Personal loans Essential to keep the products simple Pre-underwritten product guidelines